David Frum on How Tariffs Will Hurt the U.S. Economy: Full Interview — WONK

[00:00:00] David Frum: Trump is making, systematically making U.S. manufacturing less productive and competitive and he's trying to offset the harm by taking bits of manufacturing from other people. But the whole thing is a sucker's game because ultimately you're making North America the highest cost place in the world to do any kind of business. [00:00:19] Speaker 2: Welcome to Wonk. Whatever you think about Donald Trump, it's clear that his unique style of governing and diplomacy are having a sizable impact on America and on the world. Canada knows that all too well. For better or worse, there's a new order afoot. Will the new vision outlast the president? David Frum is one of the deans of political writing in the United States, a former Bush speechwriter, now senior editor at The Atlantic, author of many books, including two about Donald Trump and the modern Republican movement. David Frum, thanks for being with us. Thank you. I did want to start with big picture. You're an observer of many presidents and particularly this one and the party. And I wanted to start with on a week when he's had a kind of a big success on the heels of a big success in the Middle East, your view of his overall success. Is this a presidency that's working for America? Well, the American economy is shriveling as we speak. [00:01:16] David Frum: The job situation is bad. The trade situation is bad and getting worse. The United States has been cushioned from the impact of Donald Trump's decisions by this huge investment boom in artificial intelligence. Maybe that will continue, maybe not. One of the things I've noticed about the boom in artificial intelligence is while Trump puts tariffs on many things, he doesn't put tariffs on the computers that go into these artificial intelligence facilities because that would hurt the stock market very directly. But everyone is experiencing higher prices, more difficulty in getting jobs. You see rising economic discontent. So on the thing that Donald Trump was elected to do, lower prices and keep the economy going, he is signally failing. And we're going to, and as we move into this big retail season from Halloween to Christmas, I think that failure is going to be more and more painful to more and more [00:02:08] Speaker 2: Americans. We have seen a couple of big forecasters just this week, it's the IMF, noting the surprising resiliency, not just of the American economy, but the world economies to the trade and the geopolitical friction. That's it. That's a foot. But they always say, but sit tight because it's coming. Is it possible the resilience actually is more enduring and that it's not, it's the worst outcome of what economists would predict from all of this won't happen? [00:02:37] David Frum: Well, anything is possible. A lot of things are possible. One reason I think the markets have tended to shrug off the Trump tariff spasms is there's a lot of doubt that the tariffs are legal and that the courts will regard them as legal. So Donald Trump, the Constitution gives authority over tariffs and trade to Congress. But since 1934, there've been a series of delegations to the president by Congress of certain powers. And when Donald Trump, I won't go into the details here, but they're in silos. They're very specific. You have certain powers in this domain. Some powers are large, but temporary. Some powers are permanent, but small. And Donald Trump has taken these silos of power and created a general plenary grant of his ability to create a tariff on anything for any reason indefinitely. Now, two courts, the Court of International Trade and the U.S. District Court for the D.C. Circuit, so that's the third highest and the second highest in this domain, have both said these tariffs are illegal. This case is going to the Supreme Court. The Supreme Court is very Trump-friendly. They may not go all the way. And there are other powers that are not in contention right now that the president could still use to impose some tariffs. I think there's a lot of sense among market players. We're not sure these tariffs will be legal come Halloween, come Thanksgiving. So that's one reason that things have shaken off. The second is this artificial intelligence investment boom and all the products. But, you know, the ordinary people are not feeling it. And one of the consequences of the artificial intelligence boom to the ordinary person is the average American electricity bill is up by about 30 percent over the year because of demand for electricity from these AI facilities. [00:04:10] Speaker 2: If we don't see it, there are a few actually, of course, important Supreme Court rulings coming this fall. As you noted, it's a friendly court. Can you just, I guess, reflect on the importance of what it will mean if this court doesn't uphold the lower court rulings? If it's seen as overly friendly to Donald Trump or complicit in some way, can we even think about the Supreme Court of America in those [00:04:32] David Frum: terms? Sure. It's made up of human beings and they're subject to the same kind of. There's a famous line about the Supreme Court from one of the great justices, Robert Jackson. We are not final because we are infallible. We are infallible because we're final. So there's no appeal. But that doesn't mean people have to like it or believe it. Now, my guess is the Supreme Court will probably not say, yes, the tariffs are legal. They will do what they did with Donald Trump's criminal impunity, which has come up with an incredible, they'll pull an incredibly complicated doctrine out of thin air. I could say something ruder. That's what they did with the, they took all of these pieces and they did, they, a Supreme Court, a conservative Supreme Court is supposed to say their opinions rest on two sources of authority, either the plain text of the constitution or the statute, or else the historical understanding of the constitution and the statute. And they threw all of that out the window when they invented a criminal impunity for the president. They said, well, the logic of our system and this is what makes sense. And those were not crazy, crazy things to think. They're just profoundly hypocritical. And they may do something similar in the tariff case and then kick it back to a lower court for more fact finding. Because John Roberts' basic approach to Donald Trump has been, I don't love this guy. He's the chief justice. I don't love this guy, but let this cup pass from my lips. I just need to postpone all the decisions beyond his tenure because I don't want to fight him. But it's not impossible. They will say the tariffs are quite illegal and just give you an idea of the impact of that. The tariffs are a massive source of revenue for this government. They're a very inefficient source of revenue. That is, the pain to the people who pay the tariffs is much greater than the benefit to the government of extracting the tariffs. But still, it's raising 30, 40 billion dollars a month for the U.S. government. And to put that in context, there's a big hullabaloo in Trump world about no tax on tips, which is this gimmicky thing that a certain kind of tip income is not taxed. That holiday expires at the end of 2028. For the entire period that it's in effect, from beginning of 2025 or mid 2025 to the end of 2028, that will cost the U.S. Treasury less than is raised in one month by the tariffs. So these tariffs are a big, big deal for Donald Trump's fiscal plans. [00:06:40] Speaker 2: If the court rules that they're illegal, what happens to the revenue already collected from [00:06:45] David Frum: businesses and countries? That is a really tough question. Because the money has to be returned, will have to be probably. The court can say, you know what, the government can keep the money, it's improperly collected. But it may say it has to be returned. But understand, a tariff ramifies through the whole supply chain. So the people who will get the refund are the people who actually literally wrote the check to the United States government. But all the other people were harmed by the tariff. They don't get their money back. So the parts supplier paid the tariff to the U.S. government. The more expensive part went into a product. The product went into another product that was paid for by an industrial consumer, which was paid for by a retail consumer. And everyone along that chain has been harmed, but only the person at the front of the chain gets the money [00:07:30] Speaker 2: back. Of course, all of this is part of a rethinking of what America wants from trade and should get from its trading relationships. Project 2025 laid a lot of this out clearly. Robert Lighthizer laid it out clearly in his books, worth reading. I've urged many Canadians to read it because it's what we're kind of seeing unfold. Are you of the view that regardless of what happens in the midterms and then in the subsequent presidential election, I am in the camp that assumes Donald Trump will go away as he's constitutionally supposed to, that this will stop and change? Or is this part of a plan that is now in [00:08:05] David Frum: place and the world needs to adapt to? Well, thinking is a strong word to apply in this context. So Robert Lighthizer, who's the former U.S. trade representative, who did write a quite interesting book. And he is just a convinced protectionist out of the horse and buggy McKinley days. It's primitive thinking, but it's not. A lot of people have believed it over the time and not all of them were idiots. So he's in the camp of not all of them are idiots, but some of them are idiots. But if you were a protectionist, if you believe that in leaching and bleeding as a cure for disease, if you believe that, you would say, obviously, you're not trying to protect your tube socks industry. You're not trying to protect your toy industry. But the Trump tariffs, Trump is exempting the highest value parts of the trade arrangement, the computers that go into AI facilities. And he's putting terrorists on lumber, tube socks, kitchen cabinetry. So there is, I don't think there is, I mean, in Trump's case, I think there's just a kind of, the core of Trump's being, his core idea is he does not believe in mutual benefit. He is a predator. He's a predator in his business life. He's a predator in his sexual life and he's a predator in his political life. He thinks the way nations get rich is by taking things from other nations. He just thinks it's a scam and a lie that two people can sit down to a transaction and both rise from the table feeling better off. He doesn't believe that ever happens. You're either ordering from the menu or you're on the menu. That's the only way. And so that's why, so that when you say, how do tariffs on tube socks make sense? Trump would say, well, they're taking advantage of us and we'll do it to them. There's a kind of, um, brute force. Um, and I mean, I do think that there is something permanent here. I think what is, what will endure is definitely there's been a retreat from American global leadership beginning with president Obama, I would say. And a way to mark this is, um, every president from Franklin, Eleanor Roosevelt to George W. Bush did something to expand world trade, um, either general agreements or bilateral agreements. Bush bequeathed a number of ambitious bilateral agreements that were not yet finished to Barack Obama and Barack Obama grudgingly and quite unwillingly finished two of them, the South Korea free trade agreement and the free trade agreement with Columbia. The South Korea agreement was important in economic terms. It's a major power. The Columbia agreement was important for geopolitical terms because it's part of the way the United States helped Columbia exit the cocaine business and enter the world of useful agriculture, selling cut flowers and other agricultural products. So it's not a big amount of money, but there's a lot at stake for now regional security. And that was the end. Uh, Obama signed those two deals negotiated by Bush. He set in motion the Trans-Pacific Partnership, which was also inherited, but that really was Obama's work, but it was rejected by the Senate and then Obama abandoned it and Trump junked it. And since then, since TPP, there's been no trade expanding agreement signed by the United States and the so-called USMCA is not a trade expanding agreement. It's a, it's an agreement that makes the old NAFTA and made it [00:11:02] Speaker 2: more protectionist, not less. So as Canada looks down the barrel of, uh, a renegotiation of that trade deal and also the reality, I mean, David, one of the things that we're facing and, you know, you just see more evidence of it this week, um, in Stellantis moving, uh, one of its plants, uh, to the US after it said it wouldn't do that. There's a reality for businesses. They're very rational. Deployment of capital tends to be quite, um, apolitical and rational. And if there's uncertainty about the direction of the auto industry in North America and that's that integrated supply chain, they're going to hedge their bets. This all makes sense. If you're sitting on the Canadian side, we've, our economy is so massive, you know, the economy of Ontario, which is the economy of Canada is so massively dependent on that auto industry. What would your advice be about thinking through the future? [00:11:48] David Frum: I just prepare for the worst because Canadians, because it's so important, Canadians, I talk a lot to Canadian business audiences and one of the things they want, there has to be some rationality here. It can't be that all of these terrible things are happening because of just brute aggression and stupidity and malice. There has to be some plan. And I hate to break, it's not true. And the other, and, and they think, well, maybe the Americans are taking the auto industry for themselves. Well, that's not true either because I predict, I'm going to say this on, I've said this in other cases, but on the record, the net effect of the second Trump term will be to shrink the share of manufacturing, uh, manufacturing as a share of the U S economy. Because the thing that you cannot cram into Donald Trump's dinosaur brain is every product is also an input into another product. So when you, and every input is itself a product, so when you start applying tariffs to things that go into manufactured goods, you're, you're making everything you make all along the value chain more expensive. And yeah, you can get, you can reshore some of the industry. That's been, by the way, Argentina, Argentina, which isn't so much in the news, that's been their economic strategy since the war. We put up very high tariff barriers. And that means everyone has to make, they did this in like 1952. And that way, everyone has to make 1952 Ford Falcons. If you want to sell a 1952 Ford Falcon in Argentina, you have to make a 1952 Ford Falcon in Argentina. Okay. Well, somebody will do that. And 50 years later, they're still making a 1952 Ford Falcon in Argentina because no one's going to invest in this tiny little market. So what is, what is Trump is making systematically making us manufacturing less productive and competitive. And he's trying to offset the harm by taking bits of manufacturing from other people. But the whole thing is a, is a sucker's game because ultimately you're making North America the highest cost place in the world to do any kind of business. [00:13:36] Speaker 2: Unfortunately, of course, and this is coming right out Lighthizer's book, the trade-off is for quality work over low cost of goods, low cost of consumer goods. And I actually do think that's a trade-off. [00:13:48] David Frum: That's not even slightly true. I mean, that's, that's where you say this guy's leeching and bleeding. It is not true. Because look, the old, the first text of free market economics is written in the 1840s by a man named Frederick Bastiat. And he tells the story of a little street urchin who throws a rock through a window and he smashes the window and Bastiat says, did that boy help the economy? Because look, the glazier has to come and fix the window. And he says, yes, but the 30 sous that are spent on the window were money that the shop owner had intended to spend on shoes, on, on books, on food for his family. Now he won't. So there's an, it's what one sees and what one doesn't. So yeah, you can, as they do in Argentina, you can create a tiny little class of highly cosseted, non-competitive workers receiving artificially high wages. But it's all the things you don't, you don't see. I mean, just to put this in one, a context I use a lot in the first Trump term, Donald Trump did everything he could to keep the coal industry alive in the United States, job. So how many coal miners were there in the United States in 2017? And the answer is the whole industry, not just the miners, but the bookkeepers, everybody was 50,000 people, which is fewer than the number of people who are licensed to teach yoga in the United States. So yes, you can, you, that, that, I mean, there's a, there's a kind of economic sexual angle to this where they're thinking, yeah, men shouldn't have to smile at work. Men should be in work where you don't have to smile and you don't have to deliver any kind of customer service, where you're a big, burly, brawny guy and you slap something and you bang something and you, you make more than your wife. So she has to be nice to you, whether you're nice to her or not. And that's our vision. And what they don't understand is, meanwhile, the economy of the future is happening somewhere else. And those jobs are only going to exist inside the United States because they cannot sell into world markets. For sure, all economically accurate [00:15:40] Speaker 2: opportunity costs. And I mean, Canada knows this well, right? All of the money we're now spending at a time when we desperately need investments in businesses and things that are not mitigating against this sort of activity. But the political message is pretty compelling, right? And, and one thing we know about Donald Trump and this Republican party, and now I want to come to the bigger party and what you make of it, is they do seize on these messages of, we're going to bring your jobs back, even though it's nonsensical, even though it's impossible, even though that means your flat screen TV will be $9,000. Yeah. It doesn't, it does sell though, David. People like, they, they believe it and it sounds good. [00:16:16] David Frum: They believe it until you don't, until you do it. So one of the things that we have seen in polling is a collapse in support for the trade, for the trade agenda. And what is also happening in this, to take the picture now a little bit more purely economical, um, Donald Trump is re-running the economic policy of the 1970s. In the 1970s through, um, because of external events, there were shocks to supply oil became much more expensive. Other raw materials became more expensive. So supply became constrained and, uh, governments consciously or not tried to cushion that blow by making money more abundant. And so you got stagflation because there was less supply and more money. So that's, that's the Donald Trump strategy because he's doing two things to reduce supply. Um, the tariffs and other kinds of actions to make the United States uncompetitive, like the tick tock deal, where you, you take a $45 billion company and give it to your friends for $14 billion in return for them make, not allowing people to say mean things about you on tick tock. Um, so that, that is, and then the immigration policy, some of which was necessary, but which is so capricious and so brutal and so unpredictable that again, it's squeezing supply. And how is Trump responding to the rising level of discontent? He's pressuring the federal reserve to create more money, lower interest rates, less supply, more money, stagflation again. And we are seeing a lot of signs of that happening. So I don't think this is a formula that although people, when you're not doing it may think, well, it's common sense. If we keep out foreign goods, we'll have more jobs here at home, but when you actually do it to them and they notice, wait a minute, I'm harder to get a job. My money doesn't go as far. Everything costs more. And, uh, things are in short supply because they're rounding up the people who make them and keep and borrowing the goods from entering the country and the goods that go into the goods. It's not just flat screen TVs. It's everything that goes into everything Americans make is more expensive. [00:18:03] Speaker 2: You yourself have written about the amazing kind of cohort of Americans who will believe in Trump and support Trump regardless. There's an important midterm coming up that could determine, right? How the, uh, how the balance of power is shaped in Washington. What's your view of whether the, it's, it's still a long way away politically speaking, but what's your view of, uh, what happens there and what it'll mean for Republicans and, and America at large? Well, there's an embedded premise [00:18:31] David Frum: in your question, which is the election will be allowed to be free and fair. Yes. Uh, and I think for the first time, the history is, uh, since maybe this end of the civil war, that's a real question mark. Um, Donald Trump is trying, and I'm not saying they won't be free and fair, but what I noticed is Donald Trump has got a series of schemes as to ensure the elections are less free and fair. Um, and he's trying them one by one. Um, he's trying, uh, the, this off year redistricting, normally redistricting, there's a census in a year ending in a zero and there's a redistricting in a year ending in a one. And Donald Trump is now saying, let's do another one in a year ending in a five in ways that are more advantageous to us. They're also trying to attack voter rolls in ways that are suspicious. They're putting troops in the streets in cities where they expect to have political trouble. Now, I don't think any of this adds up to exactly a thought out plan of action. I think it's more like, um, a burglar trying the doorknobs in a house to see which one is locked and which one is open. We'll see which works. And a lot of this is instinctive rather than intentional, but the question of whether the elections of 2026 will be truly competitive. They will happen. You can't stop elections in the United States. Elections are creatures of the states. There's no lever that a president can pull to stop the elections. But he can do a lot of things to make it, to give his party an advantage and to disadvantage the others, including one of the things Donald Trump has been talking about a lot are prosecutions of democratic fundraising platforms for not being deferential enough after the murder of Charlie Kirk. If you, um, say bad things about Charlie Kirk, we will prosecute you as a terrorist and we will break up your fundraising to platforms. And some people say bad things about Charlie Kirk. It used to be a free country. [00:20:05] Speaker 2: Is it your view that Americans everywhere, and I don't care about political stripe, are responding appropriately to the threats that you just mentioned? The very idea that elections might be, um, at risk. And I hear people casually saying, you know, if there's another presidential election, which, you know, brings a knot of, of nausea to my stomach. Are Americans responding appropriately to that risk? [00:20:30] David Frum: No, because the problem is there's, there's a large element of Donald Trump that's so farcical that he invites you not to take him seriously. So when he has, has a meeting at the White House and hands out Trump 2028 caps to the Speaker of the House of Representatives, and when some of the people wear them, now that's unconstitutional, it's illegal. Trump is just getting you used to the idea that that's the kind of thing he's thinking about. Now, will he try to find some way to get an unconstitutional third term? He'll try. I mean, he's telling you he'll try. Will he succeed? I don't know. But, um, when someone says, I'm just going to, I'm going to sit here in your living room and play with matches and see if I can ignite your carpet on fire. You know, you say, well, you know, that's a pretty flame, it's not a response. That's a pretty flame-proof carpet. I think you will, and you don't have enough matches. So I think you probably won't succeed in setting my carpet on fire. He's sitting there in the chair in your living room, lighting matches and trying to ignite your [00:21:19] Speaker 2: carpet. He may fail, but he's trying. I have to ask you how your life has been, um, as an outspoken, uh, detractor of this administration. Um, it just is literally occurring to me as we talk, that life has been very uncomfortable for a lot of people who are seen as opposed to Donald Trump. [00:21:37] David Frum: Are you in that camp? Um, I, I, I have a lot of personal problems, but, um, I, a lot of personal troubles, but Donald Trump is not at the head of them. I'm happy to hear that. Uh, and your personal [00:21:50] Speaker 2: security is, is intact. Like you don't feel under threat. No. Um, this, this, the nature of the [00:21:56] David Frum: threat that people have in sort of my line of work is not a threat from the state. I don't fear that, um, ICE is going to come to my door and drag me away. Um, what I do fear is, um, that the general level of incitement, uh, will cause someone who is in no way related to the government to try to do harm, not maybe to me, but to people I care about, um, uh, to friends of mine. Um, every journalist in Washington lives with a higher level of this kind of informal threat. Again, it's not the government doing it. It's just the government permitting it. I think a really telling example of our age is what happened to Nancy Pelosi's husband. He was attacked with a hammer by a maniac and no one sent this maniac, but the era of accusa of false accusation against Paul Pelosi and Nancy Pelosi that did come from the government. And then when Paul Pelosi, who was a man in his eighties and I will never be the same after this attack was severely hurt. The people around the president, including the president's son and United States senators mocked the attack as a big joke. Um, and that creates an atmosphere where, um, other maniacs may feel, uh, that they're nothing too bad will happen to you if you take a hammer to the head of a supporter of, of the Democrats or an opponent of [00:23:11] Speaker 2: the president. I think, uh, fear is one thing in different ways that this administration has managed to instill right in political opponents and journalists and, and in other heads of state. And I know you talk to Canadian audiences, you must get this question. How are we doing? I mean, we, our prime minister seems to have struck a note that's working, um, doesn't sit well with all Canadians. Uh, if you, if you read the reaction to it, but is it the right approach? [00:23:38] David Frum: Well, I, I would just say, um, there's something in the Canadian public persona, public character that is not well suited to this era. Canadians are very prone to believe that if you have a cordial meeting, something positive must have happened. And, uh, so I, I think Canadians just need to have a much flintier and more suspicious. Canadians want, they need the relationship to be excellent and they can't adjust to a world in which it's not. And they have to accept there's something that Canada did that is to blame for this. And, and that there also must be some larger strategic purpose and not just malice and stupidity at work. Um, and so those are very, and, uh, difficult things for Canadians to accept. And then the problem is that Canadians then have, well, when they think about how would they respond, that the most effective means of retaliation strike at the sinews of the Canadian Confederation. The most effective thing Canada can do is apply export taxes on unique raw materials that can only come from Canada, potash, nickel, um, hydroelectricity from Ontario and Quebec. But of course these affect the provinces unequally. The sacrifice of the export tax will not be equally shared. And so the provinces that have most to lose, which are basically Alberta, Saskatchewan, and Quebec, raise vetoes within the Confederation against the measure that is most effective. And so the government is then forced to fall back on other things, which can, like countervailing tariffs. Kearney is quite right about this tariff versus tariff is a, is a losing game for Canada. Look, it's all a losing game for Canada, but the Canadian strategy must be to understand Canada has more permission from its people than the United States does, or Kearney has more. So the game is to lose slowly. So that means you must do things that are, do not cause more pain to you than to your counterparty. You must do things that cause less pain to you, even if they do cause some pain. And, and export taxes are the answer, creating funds to go raid talent. You know, there are lots of academics in the United States who have spouses who are, they're afraid, will end up in a cage. So go to that person and say, would you like to bring your lab and your 10 best graduate students to the University of British Columbia, or the University of Alberta, or Queens University? There's a fund of billions, tens of billions of dollars to bring those people. And whenever, whenever, um, Loudmouth Lutnik says something is bad, that's how you know it's good. But those are things that they bear unequally. That's why Canada's stuck with the symbolic boycotts of American hard liquor. It's not the most effective thing, but it's something that everyone can do. It doesn't affect that many people. And it makes [00:26:00] Speaker 2: Loudmouth Lutnik very upset. And of course, the hardest line has been taken by, uh, the province of Ontario. Um, and the, the premier really does talk about, um, hydroelectricity, electricity, um, trade, and, uh, he's keeping liquor off the shelves, even though that's an irritant. Yeah. One of the things that's happening right now, of course, is Canada's looking desperately for the diversification that we have not pursued for, uh, generations. China's very much at, in sort of, in sight right now. I've said this before, but I find it fascinating that at this moment in history where China could have chosen to position itself as, you know, a more benign counterpart in the world, it instead had a meeting with Russia and North Korea. Yeah. But Canada, nonetheless, needs to do business with China. We have tariffs from them on our, our canola, which is particularly an irritant. Should we lean into that relationship in whatever way we can, or do we remember that China is, can be a hostile actor [00:26:56] David Frum: in the world as, as much as any other? I think the most important thing to keep in mind is to learn the lesson of the bad era of the seventies in Canada, which is to remember that if you let politics drive your economics, you're going to get bad politics and bad economics. So what, what happened in the 1970s in Canada was there was a, because of the Vietnam War, there was a surge of anti-American feeling in Canada. And so the Canadians of the seventies, especially the Pierre Trudeau government said, let us have a political strategy to reorient trade where trade does not want to go, but to make it go there anyway. Um, and that had very ill effects. Um, so I think the, the mission for Canada is to understand, look, proper trade, proper economics is under threat because of the American actions. But Canada mustn't let itself be turned into a statist, nationalist, government-directed economy, one whit more than is absolutely necessary to deal with the present crisis. And to say, well, Canada's going to, it's not really a good decision for a government to make to say, Canada's going to do more business in China. That's a decision for individual people spontaneously to make. Um, but it is, I think what I, the part of this where I would agree is the United States has always had, um, a force multiplier of an alliance with the most technologically advanced wealthiest countries in the world. And Trump is attacking that. And at some point you lose the benefit of the thing that you yourself are destroying. So I would be, if I were advising, I don't think Canada should be having talks about continental missile defense. I just don't think that should be on the table. Um, you don't, because America, when the president of the United States is saying in so-called jest, we want to destroy your national independence. So you know what, you're not a good security partner for us. Our security partners respect our national independence. Our enemies threaten our national independence. Uh, and we don't share missile defense with our enemies. So are you friend or foe? Um, if you talk this way, you are foe. Um, now we don't, again, because people think Trump is a loud mouth and an idiot. They don't stand a liar. They don't take everything he says seriously. But, um, and I don't think he's actually planning to invade Canada, but I would not be talking with him about common defense projects. And when they say we want a Canadian security cooperation in other ways against other adversaries, if Canada independently agrees that this country is a problem for Canada as Russia is well then. Yeah. But, um, China is, is both threat and partner. Um, it's a good customer in a way that Russia never was, never will be. So again, Canadians need to have their own. They need to separate the domains of security and, um, politics from the domains of economics, because to say, let me end the story with, with a warning, a very specific warning. Um, I was recently, um, in Winnipeg and was talking to, uh, uh, man who owned, um, an independent brewer and, uh, the one, the, the first or second largest cost in a can of beer is the can itself made out of aluminum. And he was complaining about how the, the aluminum cost had risen. And I said, I don't understand how that would make sense because the aluminum is made in Canada. It's locked out of the American market. It's trapped in it. You would think that that would cause the price of Canadian aluminum to be artificially cheap. He said, you don't understand that because we have these integrated continental industries. Canada produces, produces giant sheets of aluminum, which are very efficiently shipped to the United States where they are formed into, into various forms, including beer cans and shipped back to Canada. And so what happens is the tariff on a beer can of beer made in Canada is sold, is applied twice. Once when the sheet goes south and once when the can comes north, the Canadian tariff, I think is now gone, but in those days it was there. And so some Canadians are saying, aha, the answer to this is Canada should have a beer can industry, all of its very own. You think that's not going to be a very efficient beer can industry. And so I understand the need to strike back and to defend yourself, but you also can't be pushed into having your own version of an Argentine economy behind tariff walls in, and become a Chinese agricultural colony. That's also a danger. [00:30:46] Speaker 2: It is, of course, the way many countries are behaving, even if they, even if it doesn't make sense. And if we're honest, it, of course, President Biden didn't interrupt that path, right? This sort of [00:30:58] Speaker ?: more... No. [00:30:58] David Frum: He was the second most protectionist president since the world. [00:31:01] Speaker 2: Right. And very willing to put American tax dollars, government dollars to work inside that economy. And so we follow a little bit. Our best case scenario, David, is that we wind up with a deal as close to the one we already have, you know, in a couple of years to, I guess, a year and a bit. Do you think that's likely? Or do you think, as I do, that there will be some across the board tariff, maybe not 10%, but there'll be some tariff that we have to pay to get access to that market? [00:31:29] David Frum: Yeah. Now, I think you're probably right that a best case scenario is a bilateral deal that is a little worse than USMCA, which in turn was a little worse than NAFTA. But understand this is not a very good outcome, because what Canada needs is not bilateral access to the United States, but multilateral trade. And what Trump is doing is so much damage to a series of relationships. And in a way, he's teaching the present generation all the things that the people who were active in the 40s and the 50s and 60s did to build the modern world. And Trump is taking a hammer and one by one, smashing the components, the defense guarantee, the collective security defense guarantees, the multilateral free trade agreements, the bilateral free trade agreements that are supplements on top of a multilateral free trade agreement, but can't substitute for it. The general confidence and trust in the leadership of the United States, where sometimes in the past, Americans have asked their partners, who have narrower views than the superpower does, to do things that are not in that each country's individual self-interest for the greater good. But that's always been founded on trust. I mean, I think the, an anecdote that sort of sums up how, what we're losing. During the Cuban Missile Crisis of 1962, Charles de Gaulle had become president of France. And the de Gaulle-US relationship was very touch and go, very difficult. And so of all the allies, the Americans were most worried about French participation in France at that time was a considerable military power. Their support mattered. And so President Kennedy sent Dean Acheson, who was the Secretary of State during the 1940s, a very revered person, and especially at a very high standing in France, to go speak to de Gaulle and to bring him all the photographs of all the Russian installations in Cuba to persuade de Gaulle to sign up. And de Gaulle, as ornery and difficult as he was, when he saw Acheson walk in with a stack of photographs, said, I don't need to see those photographs. If you tell me this is the ultimate emergency, in that case, I trust you. Meaning I'll be difficult if it's an everyday business. Yeah. But when it's really zero hour, of course we stand together because I trust you. Now, who would be fool enough in the world to believe a word from President Trump's personal? First, it'll be some kind of Nazi troll from 4chan whom he will send over to see you. But second, he lies all the time. And he's selfish. And no one, no one, no one will follow that leadership unless their self-interests perfectly align and everything becomes transactional. That's why the Middle East sort of worked out because the interests of all the parties in the very short term aligned. And however long that alignment lasts, which probably won't be that long, the thing will hold together. But the ability of the United States to say to people, there is a greater good here. And you know, this will, France, Germany, Britain, Canada, be a little expensive for you in the very short run. But you have to trust us that it will be better for all of us together in the long run. And we have proven that we're willing to show the leadership and make our own sacrifices for the greater cause. When you have a leader you can't trust, no one follows. [00:34:29] Speaker 2: Is there a Republican leader of the future that will be more trustworthy? [00:34:33] David Frum: I think we've been thrown out of the canoe into the whitewater rapids and our task is not to drown. The future of the canoe industry is an interesting question, [00:34:47] Speaker 3: but first we have to get to shore. [00:34:51] Speaker 2: David, it's so good to have your thoughts on all of this. Appreciate your time. [00:34:55] Speaker 3: Thank you very much. Bye bye, Amanda. Thanks. Good to talk to you. Bye bye. [00:35:01] Speaker 2: We've been speaking with David Frum. Before you go, here are three things we think are worth watching this week. In a fresh blow to Canada's auto sector, Stellantis says it will move production of the Jeep Compass from Ontario to Illinois. That's part of its promise to invest billions in the US and a big blow to Canadian auto workers. Meanwhile, the tariff war entered rare earth territory this week. China says new controls are coming on exports of metals that are used in everything from auto parts to computers. Brace yourselves. And finally, the Bloc Québécois has released a list of 18 demands for the upcoming federal budget. It includes 11 billion more in health transfers. It extends a boost to old age security. Given that this minority liberal government will need support from another party to pass this budget bill, we're guessing they'll give the list a good look and then call the NDP. That's Wong for this week. I'm Amanda Lang.